Monday, March 14, 2016

The Fed caught in the crossfire – Le Monde

After the European Central Bank (ECB), the US Federal Reserve (Fed) will, this week, the center of the attention of the world finance. Wednesday, March 16, after a two-day meeting of its Monetary Policy Committee (FOMC) will choose whether or not within its key rates. “The suspense is total, because markets are particularly disoriented since the beginning of the year,” Alexandra Estiot judge, specialist in the United States at BNP Paribas. “This uncertainty should convince the Fed to opt instead for the status quo” , for its part, Thomas Julien, economist at Natixis in New York.

Considering the strength of the US recovery, the Fed began a rise in policy rates in December 2015 – it had not happened since the summer of 2006. Today, they operate between 0.25% and 0.5 %, 0% against 0.25% previously. And should continue to rise in coming months.

Now, it will have consequences for the entire global economy. Making them more attractive investments in the US, but also in contributing to the tightening of financing conditions in international markets, the shift in the Fed can trigger a storm on the stock exchanges of other continents. “At least, if improperly prepared, as in 1994: the surprise rise in US rates had then caused a worldwide bond market crash” , says Christophe Boucher, an economist at Paris-X Nanterre A scenario that Janet Yellen, the Fed president, wants to …